CGT and the family home

Before I owned a house, I used to slag off the government for exempting family homes from capital gains tax. Inconsistent regulation just creates confusion and adds loopholes, I used to say shaking my head at government failures in general. Now that I’ve been a proud albatross house owner for the last few years, I can only say that sometimes compassion is worth adding labyrinthian tax complexities.

Nonetheless, I was still under the impression that I had to be living in the house for the last 12 months before I could sell it and be free from CGT. This tended to put a dent in my fantasies of getting rid of the thing while i watched interest rates, maintenance costs, bills, insurance and council rates eat into my travel budget.

Now, thanks to the handy ATO CGT exemption tax calculator which I could have looked up at anytime but for some reason never did, I know that I do NOT get slugged with CGT. You needed to have lived in the house for a period of time after you’ve bought it but once you’ve spent that time, you can rent it out. I dont know the detail of course but the calculator said I was exempt and would be exempt for another year or rent (an article somewhere said that you could lease it out for a max of 6 years).

Anyway, the upshot is I can go back to Melbourne and sell the damn thing at this very high point near complete slump of the housing market and have enough moolah to live like a king penniless lonely backpacker in SE Asia and South Asia for the rest of my life on the interest alone.


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